Recent Blog Posts

  • Estate Planning 101: 5 Tips to Avoid Mistakes
    As I work with small business owners and investors throughout the year, I want them to see the big picture when it comes to Estate Planning. Many misunderstand what the Estate Plan is all about and think it’s simply an ‘asset protection’ strategy…that couldn’t be further from the truth. An Estate Plan is about passing on your hard earned wealth to your loved ones, or a project/institution you love.  What a tragedy for a small business owner or investor to spend decades toiling to build wealth, only to have it crumble at the very end of their life because they don’t have an estate plan. YOUR wealth should go to what or who you love, NOT lawyers or to ungrateful and litigious family members fighting over who gets what. Having said that, estate planning is not just for entrepreneurs or investors – anyone who has assets and/or a family ... Read more
  • How to Start Your Own Charity
    I think most people dream of doing more charitable work and giving to others. It’s an amazing feeling to lift and bless another. For some, just donating some time and giving what they can financially is all they can do, and there is certainly nothing wrong with that. Oh, how the world would benefit if more of us could just do a little something more to help others in charitable ways. But for others, their dream is a little more grand. Some have the goal to start their own charity. Create their own 501(c)3 or charitable organization. A project that they can control with a board of directors, have fundraisers and events, and maybe even do a little more to impact our society and those in need. I’m writing this article for those ambitious souls that want to start a legitimate non-profit charity. At it’s most basic level a charity ... Read more
  • Legal Tips for Wholesaling Real Estate
    Many real estate investors regard wholesaling as a way to learn how to evaluate deals and develop your real estate network.  It is also a method to profit from investing in real estate without requiring significant up front capital.  Wholesaling is a strategy whereby the wholesaler enters into a purchase contract with a seller of real estate, and then assigns the purchase contract to another third party who will typically rehab the property and flip it for a profit (at least that is the goal). Although most investors regard wholesaling as involving less risk than, for example, the flipper who is rehabbing and selling the property, there are always risks in any transaction, and so the purpose of this article is to identify some of the common legal issues to look out for in your wholesale deals.  This article is not designed to teach you the strategies for being a ... Read more
  • Can Your SDIRA Own Bitcoin and Other Cryptocurrencies?
    Can Your SDIRA Own Bitcoin and Other Cryptocurrencies? Yes, your IRA can invest and own bitcoin and other cryptocurrencies. Bitcoin is a form of virtual currency using blockchain technology, and can be exchanged between parties for goods and services, or for dollars. From 2011 to July 2017, the value of Bitcoin has risen from 30 cents per Bitcoin to $2,550 per Bitcoin. As a result, we’ve seen a significant increase in questions from investors asking whether their retirement account can invest in and own actual Bitcoin or other forms of cryptocurrency. Can Your IRA Own Bitcoin? Well, the short answer is: “Yes, your IRA can own Bitcoin and other forms of cryptocurrencies such as Ethereum and Litecoin.” The only items an IRA cannot invest in is life insurance, s-corp stock, and the collectibles mentioned in IRC 408(m), which refers to tangible personal property such as “art, rugs, coins, etc.” and ... Read more
  • Ask Your Attorney if a “Covfefe” Trademark Is Right for You
    On May 31st, 2017, at 12:06 a.m. Eastern Time, President Donald Trump unleashed the following tweet: “Despite the constant negative press covfefe.” No one has been able to definitively crack the code (if there is one) as to what “covfefe” actually means. The President took down the tweet six hours later and replaced it with a tweet saying: “Who can figure out the true meaning of ‘covfefe’??? Enjoy!” Predictably, the word “covfefe” immediately went viral on social media, with several twitter users encouraging their followers to “ask your doctor if Covfefe is right for you” and others thinking it’s what you’re supposed to say when someone sneezes. In the following days and weeks, covfefe has taken on a life of its own and become a bit of a cultural phenomenon. Late night hosts have debated whether President Trump had some sort of minor stroke or simply fell asleep when he ... Read more
  • Self-Directed IRA Owner Wins Appeal and Avoids Account Distribution for Common Mistake
    Every year, there is at least one case when the IRS attempts to distribute a self-directed IRA for failing to meet a single technical requirement. This common situation arises when an IRA owner uses their standard, non-self-directed IRA to purchase assets that only self-directed IRA custodians allow. This was the case of McGaugh v. Commissioner, as Mr. McGaugh owned a Merrill Lynch IRA, and requested Merrill Lynch acquire FPFC shares for his IRA. Merrill Lynch sent the funds for the purchase to FPFC, but unfortunately considered the purchase a distribution from Mr. McGaugh’s IRA, and sent him a 1099-R. TIP: When buying non-publicly traded assets, such as private stock or LLC units, make sure that you use a self-directed IRA custodian who allows such assets to be held by an IRA. Mr. McGaugh intended for the shares to be owned by his IRA, and in fact had them titled as ... Read more
  • Bitcoin Basics: What is Cryptocurrency?
    Questions about Bitcoin have increased dramatically as investors have seen the price of Bitcoin rise from 30 cents per Bitcoin in 2011 to $2,550 per Bitcoin in July 2017. This article answers basic questions about Bitcoin and we’ll have two follow-up articles addressing IRA ownership of Bitcoin and about accepting Bitcoin in your business. Needless to say, there’s a “bit” of uncertainty when it comes to whether or not one should invest in Bitcoin (sorry –bad pun) but here’s a breakdown of the basics. What Is Bitcoin And How Does it Work? Bitcoin is one type of digital currency also known as crypto currency. Users of Bitcoin pay each other directly without traditional intermediaries such as banks or even governments using what is known as blockchain technology to effectuate transactions. First, you would install a bitcoin wallet on your device and it will generate a Bitcoin address. When you provide ... Read more
  • The Realities of Litigation
    For most people involved in a dispute, declaring the words “See you in Court!!” can seem like the perfect threat or even feel therapeutic at the least. Some even presume that by stating “I’m going to sue you” is like declaring nuclear war against the other side and the person or company that wronged you will certainly want to ‘settle’ because you have scared them with a lawsuit. However, people who have actually been participants in litigation soon realize that there is no such thing as “inexpensive litigation,” and many individuals, fueled by the passion of a person scorned, proceed hastily to the courthouse seeking vindication or retribution without having a full understanding of the realities that they are getting themselves into. Certainly, one of the great hallmarks of our society, and what separates the American system from many others around the world is an independent judiciary. But again, ... Read more
  • A New Bundle of Tax Strategies – BABY EDITION!
    I had a wonderful phone call last week with two very awesome clients of mine. We were getting ready to discuss some business strategies when they decided to share some “news” with me. I curiously asked what the news was since I good tell that it was good. “We’re pregnant with twins!” was the reply. This was not something that had come easily for this couple, so beyond just the normal excitement around the announcement, there was an extra bit of happiness that rang through to me. I wished that I could have been present in person, as I would have liked to give them both a big hug! After we talked a bit about the baby, they asked a familiar question—“Is there any tax planning that we should be thinking about for the babies?” I chuckled and asked if I could defer the answer for a week and write ... Read more
  • Self-Directed IRA Top Ten Frequently Asked Questions and Answers
    It’s finally here. My self-directed IRA top ten list of frequently asked questions. Whether you’re just getting started or you’ve been investing with a self-directed account for decades, make sure you know the answers to these ten questions. In most instances, I’ve linked to more comprehensive articles and videos I have on the subject. And of course, you could always crack open the best-selling book on the subject for even more information and detail, The Self Directed IRA Handbook.   1. What is a self-directed IRA? A self directed IRA is an IRA (Roth, Traditional, SEP, Inherited IRA, SIMPLE) where the custodian of the account allows the IRA to invest into any investment allowed by law. These investments typically include; real estate, promissory notes, precious metals, and private company stock. The typical reaction I hear from investors is: “Why haven’t I ever heard of self directed IRAs before, and ... Read more
  • How many properties should I put in my LLC?
    Every week, if not every DAY, one of the attorneys in my office is asked this question in a consultation. We take this seriously and have to think….Do we want to rip off our client, or give them the answer that is in THEIR BEST interest. A lot of workshop gurus, and ‘coaches’ working out of cubicles in Nevada (supposedly under the guidance of an attorney), will recommend an LLC for EVERY rental.  I truly believe this is NOT needed for the far majority of real estate investors.  It’s expensive, cumbersome and provides nominal benefit to many clients that just don’t have a lot of equity in their rentals….yet!! Is there a limit on how many properties you can put in an LLC? No.  You can put as many properties as you want into an LLC…but then we have gone to the other extreme.  I don’t want to see my ... Read more
  • Tax Strategies for US Military Veterans
    Coming back into the general population after serving in the Military can be a very difficult transition. In fact, for many of us that never served in the military, we can’t imagine the stress and challenges. With that said, and after a heartfelt thanks for your tremendous service on our behalf, we wanted to offer a few potential tax strategies that might make your transition a little smoother…at least on your tax return. Strategy #1: Pension payments are typically taxable, disability benefits are not The first thing to know is that pension payments received after retirement from the military are taxable and should be reported on your tax returns. If you also receive disability benefits from the Department of Veterans Affairs, you do NOT need to report these disability benefits on your personal income tax returns. Disability benefits may include the following items: Disability compensation and pension payments for disabilities ... Read more
  • Roth Conversions: When You Should Convert Your IRA or 401(k) to Roth?
    Many Americans wonder when they should convert their IRA or 401(k) to Roth? If you have a traditional IRA or 401(k), then that money grows tax-deferred and you pay tax on the money as it is drawn out at retirement. On the other hand, Roth IRAs and 401(k)s grow and come out tax-free at retirement. Who could argue with that? Yet, most Americans have been sucked into traditional IRAs and 401(k)s because we get a tax deduction when we put the money in a traditional account, saving us money on taxes now. For more on the differences between Roth IRA and Roth 401(k), take a look at the video from my Partner Mark J. Kohler: The good news is that you can convert your traditional IRA to a Roth IRA, or your traditional 401(k) to a Roth 401(k). The price to make that conversion is including the amount you convert to Roth as ... Read more
  • The Difference between Sub-Contractors and Employees
    This is a very important area of employment law, and far too many business owners cut corners in this area and don’t think it’s a big deal-  IT IS a big deal.  How you classify a ‘worker’ in your business, whether as an employee or sub-contractor, can have far reaching effects to you AND your business. I understand the business owner’s plight.  Many entrepreneurs are wary of the costs and extra paperwork to bring on an ‘employee’ in the business.   Terms such as SUTA, FUTA, FICA and Workers Compensation will often times deter the employer into making the ‘right’ decision, and it could ultimately be devastating to their business. Bottom line, some business’s try and treat their “employees” as “sub-contractors” and 1099 them rather than set up payroll and follow the proper procedures when hiring an employee. The IRS consistently warns taxpayers that if they are caught paying ‘employees’ as ... Read more
  • The 1031 Exchange – A Real Estate Investor’s Secret Weapon
    To 1031 or not to 1031…that is the question. Back in the real estate boom of 2005-2008 the 1031 exchange was an often used tax strategy by real estate investors looking to avoid the tax when selling highly appreciated properties. However, due to the “Great Recession” at the end of the boom, the 1031 strategy got put on the back burner of most taxpayers minds as worries of job security, declines in retirement accounts, and economic instability became the soup de jour. However, Americans are known for their resilience and now, almost a decade after that near-fatal collapse of the economy, the sun has come back out again. Property values are up and again investors are looking for creative ways to get around the state and capital gains tax. Bottom line, the 1031 exchange has proven to be one of the most effective ways to save tax dollars today! The ... Read more